Dr. Rajesh Bheda, Managing Director of Rajesh Bheda Consulting, shares his views on reaching the ambitious target set by the Ministry of Textiles for Indian apparel exports.

India has significant potential to increase its market share in international apparel trade. However, current export performance tells a different story.

Despite this potential, Indian garment exports have stagnated at around USD 16-17 billion for the last five years. The industry has struggled to recover post-COVID-19, as geopolitical developments have affected global consumption and international trade.

The immediate market outlook remains bleak. Despite tough economic conditions and lower global demand, Bangladesh and Vietnam’s garment industries have performed well compared to India, as shown in the table below.

Source: WTO

Considering the export performance of the past seven years, achieving the USD 40 billion export target seems challenging, requiring a 15-16% annual growth in exports, which hasn’t been experienced for over a decade except in the post-COVID recovery year.

This growth would also necessitate a 150% increase in the availability and consumption of fabrics and other raw material accessories compared to current levels. The question remains: Are we ready for this level of growth in raw material production or imports?

Additionally, this growth would require doubling the installed production capacity for garment manufacturing. Can we foresee this level of growth in production capacity? While the interest of international players and Indian manufacturing groups in FDI is promising, significant momentum is needed to create additional capacity across key manufacturing clusters.

To capture additional orders from existing customers and gain new ones, India must significantly improve its competitiveness. Other countries, like Bangladesh and Vietnam, are aggressively pursuing these markets and succeeding, as shown by their export performance. Recent export data from China also shows a resurgence.

To improve India’s cost competitiveness, reducing the cost of doing business is crucial, but there’s also significant scope to enhance productivity. The average efficiency level in Indian apparel manufacturing is estimated at 45-50%, compared to 60-65% in China and Vietnam. The industry needs to aim for a 30% productivity improvement over the next 3-4 years. Though challenging, this target is achievable with full force and synergy.

Rajesh Bheda Consulting’s experience at individual factory, cluster, and country levels has shown remarkable productivity improvements. Such strategies can significantly improve the industry’s cost competitiveness and help capture new markets. This also means the government needs to support factories in implementing international best practices in management through consulting advice for manufacturing excellence.

Preparing the workforce, both at the worker and managerial levels, to support world-class performance is essential. Currently, the industry faces a skills shortage, and existing skilling approaches fall short of industry expectations..

Improving the capabilities to process MMF and specialty fabrics is another crucial area. Strengthening clusters like Surat by improving infrastructure and adopting ESG standards can help widen the product basket and capture a greater share of autumn-winter orders, addressing seasonality issues in the industry.

Concluding FTAs with key markets is vital to addressing the disadvantages faced by Indian exports compared to its competitors. The industry also needs to make strides on the ESG front. While India has several global leaders recognized for adopting best practices in sustainability and circularity, industry-wide ESG adoption requires substantial effort.

Leadership development is another area to address. The industry is yearning for young leaders who can bring youthful energy and a modern outlook to address today’s and future challenges.

Unfortunately, third-generation entrepreneurs are often looking at other sectors to diversify and improve profitability.

In conclusion, India is blessed with abundant raw material availability across almost all fibers, technological know-how, a rich history of textile manufacturing, and a skilled workforce.

However, our performance in the international market does not match our potential. Achieving the USD 40 billion export target will not be easy, but if the industry, government, and all stakeholders work together to address the highlighted challenges, ‘Impossible is Nothing’.

• Challenges:

• Achieving a 15-16% annual growth rate in exports, which has not been seen for over a decade.
• Increasing raw material availability and consumption by 150%.
• Doubling the installed production capacity for garment manufacturing.
• Improving productivity, as India’s efficiency in apparel manufacturing is lower than that of China and Vietnam.

• Required Actions:

• Significant improvement in competitiveness.
• Enhancing productivity by 30% over the next 3-4 years.
• Government support for factories to implement international best practices.
• Preparing the workforce with better skills training.

• Strategic Areas:
• Improving capabilities to process MMF and specialty fabrics.
• Strengthening clusters like Surat to adopt ESG standards and infrastructure improvements.
• Concluding Free Trade Agreements (FTAs) with key markets to remove disadvantages faced by Indian exports.
• Industry-wide adoption of ESG practices.
• Leadership development to bring in youthful energy and a modern outlook.